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Incentives, Performance, and the Power of Purpose

October 1, 2010

Incentives, Performance, and the Power of Purpose:

There is a remarkable video produced by Daniel Pink, author of Drive, about motivation and how it relates to profits. He recaps two studies, one done at MIT and the other in Madurai, India, exploring the relationship of incentives to motivation and performance. Participants were offered three levels of monetary reward for completing various tasks. When the tasks were straightforward, requiring mechanical skills, the larger incentives led to greater output. However, when the tasks involved cognitive challenges, requiring creative or conceptual thinking, the results showed that the larger the reward, the greater the probability that participants would fail to produce. Whether the participants were software developers at MIT or impoverished individuals in India, the results were the same. When people were asked to use their cognitive and creative skills for monetary rewards, excessive incentives did not lead to greater results but rather a higher likelihood of a failure.

This seems counterintuitive, and yet this same study has been replicated by sociologists, psychologists and economists. So what motivates people? Money plays a part, since  people must be paid enough that money is no longer an issue and focus on achieving goals. Once that threshold has been established, there are three motivational drivers:

  • Autonomy, or self-direction
  • Mastery, aspiration to improve in a specific area, and
  • Purpose, specifically the desire to make the world a better place

Pink studied businesses such as Apache and Wikipedia, which provide their service for free. The people working with these companies are highly skilled, work without compensation, and on their own time. They also work in very sophisticated technological jobs elsewhere for a salary. Both jobs require extensive technical expertise. So why do they work for free at companies that offer a free service? The reason, Pink explains, is that it  fulfills their need for purpose.

Atlassian is an Austrailian software company and during one twenty-four hour period each month employees are free to use their time on whatever project they like. They can also work with whomever they choose. They are in a fun environment with cake and beer. The only caveat is that they must show their results to the company at the end of the twenty-four hours. The results of these “free days” have been incredible, yielding fixes to existing software problems and innovations for new software.

What does this mean for business leaders? Perhaps it time to experiment with some new paradigms and consider questions such as:

  • How can we provide greater autonomy for employees?
  • How can we inspire employees toward greater mastery?
  • What purpose can we infuse into our business that will give employees the internal motivation to break new boundaries for success?

Pink believes if you apply these principles to your business, you will be pleased with the results.

Robin Damsky

Robin Damsky is the rabbi of West Suburban Temple Har Zion in River Forest, Illinois, and co-author of Find-Fulfill-Flourish: Discover Your Purpose with LifePath GPS – a book, tool kit, and workshop series focused on guiding people toward more meaningful and fulfilling lives.

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